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Tesla Gets $34 Million Tax Break, Adds Capacity For 35,000 More Cars
cartechboy writes "The state of California will give Tesla Motors a $34.7 million tax break to expand the company's production capacity for electric cars, state officials announced yesterday. Basically, Tesla won't have to pay sales taxes on new manufacturing equipment worth up to $415 million. The added equipment will help Tesla more than double the number of Model S sedans it builds, as well as assemble more electric powertrains for other car makers. In addition to continued Model S production, Tesla plans to introduce the Model X electric crossover in late 2014, as well as a sub-$40,000 car — tentatively called Model E — that could debut as soon as the 2015 Detroit Auto Show. It turns out California is one of the few states to tax the purchase of manufacturing equipment — but the state grants exemptions for 'clean-tech' companies."
Unless you value your environment nothing, why shouldn't there be a financial reward for companies that reduce the harm on it, either directly or indirectly?
Meanwhile, if Tesla revolutionizes the modern car and creates a mini-Detroit (Golden Age, not now), I'm pretty sure California's taxpayers will be happy with the investment.
My other sig is funny.
Only if Tesla stays in CA after the free money handouts stop and the "pay back to the people who made you rich and successful" part starts. If they up and move their primary manufacturing centers to the next sucker --- oops, I mean, "forward-looking business friendly state" --- to offer them free money/power/impunity once CA's generosity runs out, that mini-Detroit could end up wherever the leader in the national race to the bottom happens to be.
Surprised no one posted that Tesla will have Models identified as S, E and X when these are all rolled out.
With a value-added tax (VAT), if you buy $150 of intermediary stuff, and use it to produce $200 of stuff, the tax is levied on $200 in total value, which is charged as $150 on the first sale and $50 to the second sale. If you buy equipment that is producing goods or more equipment, you only pay sales tax on the incremental value added, not on the cost of the machinery.
With a sales tax, you either charge on both sales for the full amount, in which case a $200 product has paid sales tax on $350 worth of sales in this example, or you do special-case exemptions, such as exempting "manufacturing equipment" from sales tax entirely, as some states do. Sales taxes are also more brittle because since the entire tax on charged on the final retail transaction, it encourages black-market no-sales-tax sales.
10 PRINT CHR$(205.5+RND(1)); : GOTO 10
Tesla is not getting tax breaks for the Model S. They are getting tax breaks for manufacturing equipment. The Model S is not the only thing they build and sell with that equipment. Tesla batteries are used in the Smart car, the Mercedes B-class will use a Tesla powertrain, and they supply most of the guts for new Toyota RAV-4 EVs. It's a smart investment by California - they give Tesla a break on the equipment, and then get additional income from the increase in products that Tesla sells (both their own vehicles, as well as parts sold to other companies). It's not like they give Tesla the tax break and then never see anything from that money again.
"Our two-party system is like a bowl of shit looking at itself in a mirror." - Lewis Black
"Luxury" funds early adoption of tech when it's expensive. The cost drops later. At one time all automobiles were luxury purchases.
A computer user above all should understand how that works.
Customers whose purchases make high performance video cards profitable to develop come to mind as examples.
"This post is an artistic work of fiction and falsehood. Only a fool would take anything posted here as fact."
Except setting up a brand new factory from scratch is expensive. Tesla is in their current location because Toyota, the previous owner, wanted out. So Tesla bought the entire factory for a good price with equipment in it.
The cost to move means having to either re-buy all the equipment again, or move the equipment. Both are very expensive options with the latter involving a whole system shutdown.
Boeing, despite having moved their head office, still makes planes in WA state where their head office used to be, because all the expertise and equipment is there.